Jon Corzine, the former head of bankrupt broker MF Global Holdings, was sued by the holding company’s trustee, Louis J. Freeh, for failing in his duty to oversee the company and causing the eighth-biggest bankruptcy in U.S. history.
Bloomberg reports that the suit, filed in U.S. bankruptcy court in Manhattan, alleges that Corzine, the company’s chief executive officer and a former governor and senator from New Jersey, along with senior executives Bradley Abelow and Henri Steenkamp, failed to act in good faith and implemented strategies that caused the company to fail.
'The trustee brings this action for acts and omissions that culminated in the business collapse of the company and the bankruptcies of the debtors', according to the complaint.
The suit follows a 124-page report published this month by Freeh, the bankruptcy trustee, which blamed Corzine and his management team for bungling an expansion of the company’s traditional business model while ignoring deficiencies in its risk controls. Corzine’s strategy invested heavily in European sovereign debt and produced no significant revenue, and he and Chief Financial Officer Steenkamp, the Chief Financial Officer, knew that the company’s controls were flawed as early as May 2010, according to the report.
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